Stocks were higher for most of the day, and the Nasdaq held on, but blue
chips ended lower as the market headed toward computer networking giant Cisco
Systems' (CSCO) earnings announcement, due
out after the bell.
All eyes were glued to the pending announcement from Cisco, which was not
expected to be positive. The company is expected to post a profit of 19 cents
per share, or roughly $1.4 billion, up from $935 million, or 13 cents a year
ago, according to First Call/Thomson Financial.
"Cisco has become a very telltale sign of where tech is headed," said Larry
Lawler, head of stock trading at Dreyfus Corp., noting the company's health
leads the market's direction much the way IBM did years ago.
"Good numbers will help the market a lot. Anything neutral to on the light
side could have negative effect." Either way, Cisco's earnings and outlook
will have an impact on stocks, given many second and third tier technology
companies depend on it for revenues, Lawler said.
Just waiting for the Cisco results pulled the Nasdaq out of its slump of the
last two sessions. Tech stocks have suffered as negative reports of
semiconductor makers brought the group down some 10% since Friday. Chipmakers
were on a comeback today. The Philadelphia Semiconductor Index finished up
under 1% after a bout of profit-taking trimmed gains in the group.
Despite a 100-basis point interest rate cut so far this year and hopes for
continued aggressive rate cutting by the Federal Reserve, investors continue
to feel nervous about the economy. In a light week of economic data,
corporate earnings reports are the market's focus.
U.S. regulators approved JDS Uniphase Corp.'s (JDSU) acquisition of
SDL Inc (SDLI) after the firm agreed to sell
a key laser plant to Nortel Networks Corp. (NT).
Media and entertainment giant Walt Disney Co. (DIS) reported fiscal first-quarter earnings of $0.16 a share,
outpacing analysts' average expectation of $0.15 per share. The Dow component
added strength to the blue chip index for most of the day, as did technology
Software behemoth Microsoft (MSFT), No. 1
chipmaker Intel (INTC) and information
technology firm Hewlett-Packard (HWP) were
the biggest gainers on the Dow.
Weakness in financial stocks hindered the Dow. The Dow Jones Industrial
Average broke the 11,000-mark during the session, but the index finished off
8.43 points, at 10,957.42.
The tech-heavy Nasdaq composite index finshed up 21.28 points, or 0.8%, to
2,664.49, while the S&P 500, a broader stocks gauge, lost 2.05 points, or
0.1%, to 1,363.55.
U.S. Treasuries ended lower ahead of the first leg of quarterly debt
refunding, which will see the auction of $11 billion of reopened five-year
notes. Amid a week of light economic data, the markets are expecting a report
on productivity Wednesday.
Stocks in the News
Applied Micro (AMCC), maker of
semiconductors, maintains guidance for the fourth quarter and the first
quarter of fiscal year 2001, but says existing orders have seen some
push-outs, cancellations in past week. Given concerns that abound in its end
markets, the company is on alert.
Supply chain software maker JD Edwards (JDEC)
said it sees a first quarter loss between $0.01 and $0.02 from normalized
operations on $208 million to $218 million in revenues. The company blamed
its poor execution in sales and services areas.
Financial services firm Bank of America (BAC)
was reportedly downgraded by UBS Warburg to hold from buy.
European markets ended the day higher. London's FTSE 100 ended up 24.20
points, or 0.39%, to 6,293.40, as investors await an interest-rate decision
from the Bank of England this week. In Germany, the DAX Index finished up
64.96 points, or 0.98%, to 6,693.03, even though the German unemployment rate
rose to 9.3% in December from 9.2% in November. German investors were
encouraged that EuroZone retail sales rose 0.2% in November. In Paris, the
CAC 40 ended up 28.86 points, or 0.50%, at 5,852.35.
Asian markets finished mixed. Japan's Nikkei index finished down 115.67, or
0.86%, at 13,269.85 while Hong Kong's Hang Seng stock finished up 82.40
points, or 1.50%, at 15,830.84.
Bush touted his $1.6 trillion tax-cut plan and weighed an estate-tax
compromise. He urged cuts be retroactive to Jan.1 as an aide said Bush would
consider a capital-gains tax on estates in a bid to win support for
estate-tax repeal: WSJ.
Bush signaled he would sign a patients-rights bill that includes a limited
right to sue HMOs. He wants to steal thunder from an expected McCain-Kennedy
Ariel Sharon appeared poised for a huge political victory over Prime Minister
Ehud Barak as voters began casting ballots Tuesday in an election seen as a
referendum on Israel's relationship with the Palestinians: NYT.
Israel blockaded Palestinian areas as militants vowed to turn today's
election into a "day of rage" Palestinian gunfire killed an Israeli soldier
on his way to vote, while troops sealed a Gaza-Egypt crossing: WSJ. By Amy Tsao